Digital disruption is changing the way we bank. From contactless cards, to branch-less banks, the way we manage our money has radically changed over the last decade or so.
Fintech upstarts, such as Monzo, Starling Bank, and Transferwise, as architects in the space, are eating marketshare across the banking and payments space. For example, Germany’s hot online banking startup N26, which only launched in 2017, revealed in October last year that it hit the one million customer mark in France — overtaking incumbent HSBC in France.
In the meantime, traditional banks have been moving with the times, although at differing speeds of technological innovation.
But Michael Corbat, CEO at Citigroup (C) pointed out that the incumbent and legacy bank role isn’t to become the next fintech model, nor to do away all traditional avenues of managing your money.
“In some cases, what people miss in banking — in this switch from analog to digital — is that it’s not a standing start of a new industry. Our challenge is that we can only move as fast as our customers are willing to move with us,” he said at the World Economic Forum in Davos, Switzerland, in a session titled ‘Shaping the Future of Financial and Monetary Systems.’
He highlighted how age differentials “completely change how we interact” and used a story about his family to highlight how banks need to be mindful of catering to a range of demographics.
“I often talk about my family and think about my 94-year-old father who forgets his pin by lunch every day, or my children who never go to a [bank] branch, and then there’s my wife and I who are in the middle of this somewhere. We can’t move away too much either way [of banking],” said Corbat.
“The challenge we give ourselves every day is to be out there — on the surface this seems uninspirational but when you process it and think about it’s quite powerful — matching best in life experiences. It’s not about being the best bank but it is being around the expectation that we will deliver and match. For example, best ride hailing, the best interface and financial services can match those. We just can’t be so far ahead that we leave our customers behind.”
Corbat emphasised that there is room for all types of banking and that there are several approaches the legacy lenders can take to remain digitally relevant.
“Financial services, when you go back in history, it probably has a reputation of being inwardly looking and doing most [of the tech, in-house] ourselves,” said Corbat.
“When I look at our model today, we do [an element of that] but we also go out and partner [with tech companies] and disruptors, and bring on [and buy] inventors. We can give them access to scale, 150 million clients and [hundreds] of jurisdictions — not many companies can do that.
“We have a three-pronged approach. We’re out buying, look what we are doing in cyber — we are not inventing our own, we are collaborating and offering strengths.”